Hyundai’s record year – can it continue? (2013)

Published: 09 January 2013

Hyundai’s metamorphosis is complete – it’s now one of the ten most popular car brands in the UK, and the first Korean manufacturer ever to crack into the Premier League of UK car buying habits.

Sales in 2012 soared by 18.1% to 74,000 units, while its Kia sister brand scored 66,000 registrations last year, according to the new SMMT figures out this week. The Korean double-act isn’t just a thorn in the side of the established French mainstream brands: it’s killing them off completely. Renault was down 40% in 2012, while Peugeot’s critical new 208 only lifted their bottom line by 4%. Ouch.

Even British market stalwarts like Vauxhall are feeling the heat from the new Korean upstart brands: offerings like the facelifted Astra and Mokka crossover couldn’t stave off a 1.1% drop in registrations, and Mazda has slumped by 16%.

How did Hyundai manage to crack the top 10?

With more conquests than the Roman Empire, for a kick-off. Hyundai says 75% of its sales are so-called ‘conquest’ buys, with punters jumping ship from the usual bread-and-butter brands in droves. And Hyundai’s five-year unlimited mileage warranty (now in its fifth year), has gone down a storm with cost-savvy motorists.

Add in the revamp of the UK Hyundai dealer network and the slew of new small cars and crossovers (i10, i20/ix35) and it’s no surprise Hyundai has gone from a cheap but not-so-cheerful alternative to credible mainstream success story.

Meanwhile, Renault’s slide has been well-documented, centring around a savage cutback of underperforming models in January 2012. It’s no suprise that the below-par Wind roadster and entire Laguna got the chop, but it’s still surprising that Renault don’t sell the icomic Espace on our shores any more. Despite the boom in mini-MPV sales, the Modus has quietly died too, without replacement. Renault has gaping holes in its range, and it’s cover-all-bases brands like Hyundai and Kia that are mopping up the sales.

Who’s next in Hyundai-Kia’s crosshairs?

Hyundai UK CEO Tony Whitehorn isn’t optimistic about 2013: he confirmed that Hyundai expects to sell 75,000 cars in 2013 – only 1000 more than 2012. That brings to a close four years of stratospheric growth for the brand, which has seen it triple its sales and outgrow the anaemic European car market for four years on the trot. Hyundai’s market share now stands at a record 3.6%: relentless expansion to 5% by 2018 is the long-term goal.

What is needed is a more polished brand cachet to reflect the company’s move upmarket from its budget roots. Whitehorn says some of Hyundai’s most precious sales are the ones they pinch from premium manufacturers – it seems in our belt-tightened times, would-be Audi Q5 or BMW X3 buyers really are switching to Hyundai Santa Fes and Kia Sportages, if you believe their claims.

Could a Korean brand really challenge the posh German badges?

CAR asked the Hyundai boss if he thought a Korean brand could ever truly assume ‘premium status’. His answer? If Hyundai continues to keep a finger is as many pies as possible, from frugal city cars to quirky coupes and big SUVs, it could end up with market domination like fellow Korean brand Samsung. Stamping out everything from refrigerators to smartphones, Samsung might not quite have the hipster cool factor of arch-rivals Apple, but it is undeniably catching its Californian rival’s sales. Food for thought, perhaps, for the sitting-pretty German brands, especially with Hyundai poised to launch a new i30 hot hatch, i10 supermini and refreshed ix35 crossover this year…

Surely there’s no stopping this Korean world domination plot?

Not so fast. Supplying those strong Hyundai sales is an overstretched manufacturing network, which has every plant globally currently running at 100% capacity, according to Whitehorn. Doldrums-dwelling Fiat and Renault would kill for that sort of workload, but the downside for Hyundai is it needs to build factories before it can ratchet sales up to the next level.

We’re promised more growth and green ink in the profit margin in 2014. The under-fire European brands have a year of respite to react before the Koreans turn the screw.

By Ollie Kew

Former road tester and staff writer of this parish